Anheuser-Busch InBev, Nabors, KfW, Nevada Power sell bonds as primary slows; spreads tighten

By Andrea Heisinger and Paul Deckelman

New York, Jan. 7 - There was a bit of a slowdown in the new issue market Wednesday, but names like Anheuser-Busch InBev, Nabors Industries, Inc., KfW and Nevada Power Co. d/b/a NV Energy decided to price deals.

It was a step back from the flood of offerings that hit the market Tuesday.

A source said the decrease in sales wasn't a surprise, and expects even less to happen Thursday.

In the secondary market Wednesday, advancing issues continued to lead decliners, by around the same roughly three-to-two ratio seen on Tuesday. Overall market activity, reflected in dollar volumes, rose by11% from Tuesday's pace.

Spreads in general were seen a little tighter, in line with higher Treasury yields; for instance, the yield on the benchmark 10-year issue rose by 6 basis points to 2.49%.

As had been the case on Tuesday, secondary dealings were in the shadow of the resurgent primaryside.

InBev prices $5 billion

In its first bond offering since the merger, Anheuser-Busch InBev priced $5 billion of notes in three tranches.

The issue was launched Tuesday and priced early Wednesday, a source close to the deal said.

The $1.25 billion of 7.2% five-year notes priced at 99.97 to yield 7.207% with a spread of Treasuries plus 550 basis points. This was in line with price talk that was 550 bps.

The $2.5 billion of 7.75% 10-year notes priced at 99.923 to yield 7.761% with a spread of Treasuries plus 525 bps. They also priced in line with talk of 525 bps.

A third tranche of $1.25 billion in 8.2% 30-year notes priced at 99.744 to yield 8.223% with a spread of Treasuries plus 512.5 bps.

This was at the tight end of price talk of 512.5 to 525 bps, a source said.

Banc of America Securities LLC, Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities ran the books.

Nabors sells bonds

Nabors Industries, Inc., a subsidiary of Nabors Industries Ltd., priced $1.125 billion senior unsecured notes under Rule 144A and Regulation S.

The 9.25% 10-year notes priced at 99.998 to yield 9.25% with a spread of Treasuries plus 676.1 bps.

They were priced at a yield, a source said.

Goldman Sachs & Co. and UBS Securities LLC ran the books.

NV Power offers $125 million

Nevada Power Co. priced $125 million 7.375% five-year notes at 99.999 to yield 7.375% with a spread of Treasuries plus 572 bps.

The deal was announced Tuesday, but waited a day to price because it was late in the day, a source said.

UBS was bookrunner.

KfW sells $5 billion

Germany's federally-owned bank KfW priced $5 billion three-year global notes Wednesday.

The 2% notes priced at 99.878.

Citigroup Global Markets Inc., HSBC Securities and J.P. Morgan Securities were bookrunners.

Top heavy week slows

A new trend has continued in the new year, a source said Wednesday. Issuers are pricing deals earlier in the week rather than waiting a couple of days to feel out market conditions.

"I think these [issuing] companies are probably thinking that things aren't going to get any better," he said. "It wasn't like before when people could just wait for the right opening. Now it's any window and they're pricing."

A lowering of new issue concessions for some issuers has also sweetened the deal.

As predicted, there was a decrease in industrial names selling bonds Wednesday, and it's likely to slow further the rest of the week.

"We had a little calendar coming in [to the week]," a source said. "That was pretty much done at the top half of the week."

Sources have said they are unsure when the deals backed by the Federal Deposit Insurance Corp. Temporary Liquidity Guarantee Program will reappear.

Unlike the first few weeks when the primary market was dominated by large bank holding companies issuing under the guarantee, it has now slowed to a trickle.

The last issue was from General Electric Capital Corp. which priced $10 billion in four tranches Monday. Then Tuesday, the company again issued, but this time did $4 billion without the FDIC guarantee.

"I'm not sure when they'll come back," a source said.

He said he knew of no names that were planning FDIC-backed deals.

In the last couple of weeks of 2008, sources were predicting the next wave to issue would be smaller, regional financial names.

"I guess they have until June," a source said. "Maybe they're waiting for some reason."

GE Capital bonds hold ground

Among the secondary issues, General Electric Capital Corp.'s new 6.875% notes due 2039 were seen holding pretty much steady around the 400 bps over comparable Treasuries at which the Fairfield, Conn.-based financial arm of giant industrial conglomerate General Electric Co. had priced $4 billion of those bonds on Tuesday - the first non-financial deal to come to market without FDIC backing in two months.

However, GE Capital's established 5.625% notes due 2017 were among the big losers on Wednesday, widening 45 bps out to the 355 bps mark.

Recent new financials hold tighter levels

Among recently priced financial issues which did come to market with that government guarantee, Bank of America NA's 1.7% notes due 2010 were trading around 80 bps over. That was out about 5 bps from their Tuesday levels, but still well inside the 97 bps spread at which the Charlotte, N.C.-based banking giant had priced $3.75 billion of the bonds on Dec. 19 as part of a $7 billion four-part mega-deal.

Citigroup Inc.'s 2.875% notes due 2011 were quoted at 78 bps over; those bonds have tightened substantially from the 188.4 bps level at which the giant New York bank company priced $3.75 billion of them on Dec. 2, as part of a $5.5 billion three-part mega-deal.

Cleveland-based regional lender Key Bank's new 3.2% notes due 2012 hung in around 77 bps over , essentially unchanged on the session; the company had priced $1 billion of the bonds at 211 bps over on Dec. 10 as part of two-part offering totaling $1.25 billion.

John Deere Capital Corp.'s 2.875% notes due 2012 firmed slightly to 79 bid; the $2 billion issue by the financing arm of the Peoria, Ill.-based farm equipment maker - one of the relatively few non-banks to take advantage of the FDIC program - had come to market on Dec. 16 at 184.9 bps.

Altria trades actively

Among the non-financials, Altria Group Inc.'s issues were seen very actively trading, with a market source pegging its 9.70% notes due 2018 and its 9.95% bonds due 2038 both around the same 573 bps over level, in from the 600 bps level at which the giant tobacco products maker had priced $3.1 billion and $1.5 billion, respectively, on Nov. 5.

Paper maker pops up

The source saw paper manufacturer Weyerhaeuser Co.'s 6.75% bonds due 2012 continuing to tighten markedly, quoting those bonds at around the 68 bps level - a pickup of about 100 bps on the day, on top of a similar-sized gain on Tuesday. Those gains followed the Federal Way, Wash.-based company's announcement that its board elected Charles R. Williamson as non-executive chairman, to replace the retiring Steven R. Rogel.

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